One week to the day after the end of commercial negotiations, Michel Biero is not giving up. While he welcomes the constructive discussions held with SMEs and ETIs in the agri-food industry, which made it possible to obtain price reductions for consumers, the president of Lidl France criticizes, in an interview with L’Express, the progress of discussions with major manufacturers on the prices of national brands. According to him, the Economic Modernization Law (LME), which governs these annual talks, must be completely overhauled due to its lack of transparency.
The boss of Lidl also returns to the roots of agricultural anger. He campaigns in particular for the generalization of tripartite contracts. He also believes that mass distribution has a major role to play in reconquering French food sovereignty, at the risk of seeing new farms disappear in the territory.
L’Express: What assessment do you draw from the period of commercial negotiations which has just ended?
Michel Biero: It is clear that the price reduction objective, which was expected by the government with the progress of these negotiations, has not been achieved at all for three quarters of them. With mid-sized companies and SMEs having completed theirs by January 15, things went very well. Most came with proposals for price reductions, which resulted in an average decrease of 2 to 3%.
With multinationals, we are on an average increase of 2% to 5%. We are in total opacity as usual. There is neither trust nor transparency. I sent a letter to the President of the Republic and the Prime Minister on Monday to tell them that the economic modernization law (LME) urgently needed to be overhauled. We are the only ones in the world to have this regulation which makes the negotiation of national brands incomprehensible and very opaque.
Is the return of inflation in the country the cause of the difficulties?
For seven years I have been saying that the LME is obsolete and that we must stop. We are the only country in the world to have to negotiate with brands according to a law of this order. There is a problem somewhere. When I talk to my Spanish colleagues where I spent a few months in purchasing, they burst into laughter. To buy a jar of Nutella or a bottle of Coca-Cola, we start from a general price which comes out of nowhere and which is the same for everyone. To be able to negotiate it, I have to sell services to the industrialist [NDLR : des promotions ou des mises en avant dans les supermarchés]. But at no time do we talk about raw materials, logistics or packaging.
What is your opinion on the controversy surrounding purchasing centers?
Mr. Leclerc said that he had the same center as Lidl, this is false. Ours buys products for 33 countries that do not have national connotations, such as private label shampoo. Among our competitors, there are service trading centers, which are located abroad while they do not have stores abroad. They negotiate by joining forces with other foreign distributors to have greater purchasing power. Lidl is not married to anyone, and never will be.
What system do you recommend today to put an end to the opacity of the LME?
When I buy a private label brand, my buyers talk to the manufacturers and tell them: “I would like to buy spread with X% hazelnuts, palm oil and sugar. I would like also a glass jar and plastic lid with four-color packaging. They construct a purchase price with the ingredients and components that make up the product. Next, we look at logistics. From this, the supplier sends me a price proposal. Then comes the negotiation. It’s called transparency. We are not carpet merchants, like in these international centers located in Belgium and Switzerland.
These are partnerships with people who have worked with us for 15 or 20 years. Today, with the LME and the brands, it’s quite the opposite, we can’t talk about partners. When you ask them “How do you explain this increase?”, we have no answer. I’m not asking that they open their accounting notebooks to me, but that they at least give me the production costs. I’m not stupid, I know that there are also expenses linked to marketing and innovation. As someone who buys throughout Europe, I can see that certain products are more or less expensive depending on the country.
What should be done?
We must completely overhaul the system, we cannot continue like this. I don’t understand why the government doesn’t want to change this law and go back to simple things. How come national brands display promotions of -90%? There is not a country where this exists. We are used to the French having this type of markdown. This means that all year round, consumers overpay the price of Ariel or Skip laundry detergent. All of this falls into this famous general price, into these opaque discussions, because promotions are part of the services that the distributor must sell to the manufacturer.
Is mass distribution responsible for the agricultural crisis?
We all have a responsibility, both in mass distribution and among manufacturers. When some people sell pork for 1.99 euros in January 2024, I’m sorry, but that doesn’t help improve farmers’ income. Rather to kill the French pork industry. I find this totally unacceptable. I respect the commitments I make to the agricultural world, but the customers do not repay me.
How do you view this movement?
I welcome the announcements that have been made. But you know, my father-in-law is a farmer. He tells me that he is tired of living on help and not on his job. Every four mornings we make a law. Why would the legislator not include the obligation to enter into a tripartite approach? Today, Lidl has 5,000 breeders who are involved in this type of contract. It works wonderfully and is childishly simple. But I only have 20% of my business around beef, pork and milk which falls into this pattern. For what ? Because manufacturers do not want to go any further.
Why is the generalization of these tripartite contracts not taking place?
You first need will on the part of the distributor, but even more on the part of the manufacturer. When you are in a tripartite approach, you are transparent. The three actors are around the table. For example, the breeder says: “For a kilo of pig, today I need €1.80 to get by, cover production costs at a minimum and get a small minimum wage to live on.” In my tripartites, I guarantee and protect the income of breeders. Then, the farmer leaves the discussion and a second contract is put in place with the industrialist with whom I continue to fight to negotiate prices. I am convinced that the guaranteed minimum price is something possible.
What is this anger in the agricultural world about?
It is largely legitimate. I’ve seen it coming for a very long time. We have been at the Agricultural Show for ten years now, like McDonald’s, but not our competitors. You have to ask yourself the right questions. We can offer very attractive prices with good value for money while properly remunerating the agricultural world. If we want to safeguard French food sovereignty, we have to change things. We have lost 100,000 farms over the last ten years. I recently saw an advertisement from a competitor selling milk for 75 cents, this is not acceptable. It is slowly killing the industry. Afterwards, he shouldn’t be surprised when farmers demonstrate in his parking lots.
.